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President Barnard’s message on financial position, budgeting

August 3, 2016 — 

 The following is a message from President and Vice-Chancellor David T. Barnard:

Dear Colleagues,

Recently, one of our colleagues – a faculty member – stopped me on campus and asked some questions about our University’s financial position. I’ve been reflecting on those questions and came to the conclusion that I want to share my responses to him with the entire University of Manitoba community.

Our budget planning is an open, transparent process that begins with broad consultation with Deans and includes input from the Budget Advisory Committee (BAC), made up of faculty, support staff, student representatives and administration.

We gather a lot of data to inform our discussions, deliberations and decisions. We take budget planning seriously and deal comprehensively with all of the matters in front of us. We make the best decisions we can both to ensure the University is in a healthy financial position – now and for the future – and we’re achieving the objectives outlined in our widely-endorsed strategic plan, Taking Our Place.

The bottom line is that today the University of Manitoba is indeed in an overall healthy financial position. Why? Because we’ve managed it that way in a time when our expenses have increased faster than our revenues. I know that might appear to be a simplistic statement but it’s our reality. And, as a result, we ask faculties and units (including my office and all other administrative units) to adjust their budgets to help us pay for our top priorities and commitments, including our salaries.

Our salaries and other employment costs make up the largest part of our University’s budget. Seventy-eight percent of our operating budget meets the commitments we make – primarily through the collective bargaining process – to salary increases and benefits ranging from health to professional development to pension. And, I’m pleased that we have been able to make competitive, albeit modest, increases to salaries and benefits. You work hard, you make important contributions, you help change lives for our students and our communities: you deserve to be rewarded for that.

I am proud of how our approach to the budget has ensured the fiscal well-being of the University of Manitoba so that you and your families have enjoyed these benefits.

Salaries are not the only reason we ask our faculties and administrative units to make budget adjustments. We also reallocate funds to the agreed on strategic priorities that benefit our entire University community. Examples include support for Indigenous achievement, improvements to our information technology systems, new research and teaching initiatives, improving our places and spaces including classrooms and laboratories, and financial assistance for our undergraduate and graduate students.

We’ve also increased our support for units such as External Relations. During the period of increased investment, External Relations – together with our university and broader community – has achieved incredible successes particularly through the Front and Centre campaign, raising almost $400 million to support students, faculty and our campus environment. I also believe their work in telling your stories and connecting us with alumni, government and the community generally has directly resulted in increased support for the work we do.

I don’t live in a bubble. I know that when we ask for faculties and units to make incremental budget adjustments it also impacts the work environment, including necessitating that some positions might remain vacant, or even be discontinued. And I recognize the difficulties that come with that. However, if we were not managing with these incremental adjustments and our costs continued to inflate, we would be in a very different – and far more difficult – situation than we are in now.

The discussion I had with the faculty member I referenced earlier also raised another question. He asked about the “$95 million profit” we have. Colleagues, there is no $95 million profit. On paper, and out of context, it may appear that way. But that’s inaccurate.

As a not-for-profit organization, we must follow accounting standards that require us to report our monetary ins and outs as Revenues, Expenses, and Inter-fund Transfers. The $95 million number you may see is, in fact, Inter-fund Transfers and represents various commitments we have on the operating fund such as: the purchase of all the capital assets of our university (they’re in your office and mine… such as library books, furnishings, lab equipment), payment on our incurred debt, scholarships and awards, faculty and unit provision funds, building care and carryover.

This is not a centrally held pot of profit. It is principally committed funds that support your work and the work of your colleagues and the commitments we make to our people and places. Much of that money is held in our Faculties and academic units, where it can most directly be used to improve the experiences of our students and the work of our faculty.

We have no motivation to hold a pot of money centrally, outside of the University’s investments and savings to ensure you – we – are all protected from contingencies, as you would use a family savings account.

I’m sending this because I want to clear up some of the possible misunderstandings there may be about the University of Manitoba financial position and budgeting. We are in a stable position thanks to prudent fiscal management and because of your work and the sacrifices that have been made along the way. There’s no denying that the path is sometimes a difficult one. But it’s better because of our collective decisions and hard work.

The University of Manitoba is in a healthy financial position. We exist in uncertain times around revenue and expenses. And we will manage to ensure we get through the uncertainty. We will continue to thrive, working together to create, preserve, communicate and apply knowledge and taking our place among leading universities through our commitment to transformative research and scholarship. That’s our mission. That’s our vision. And I applaud you and your work in bringing both to life.

I hope you will continue to enjoy the summer months.

Sincerely,
David

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